COVID-19 pandemic causes GST to hit both Center and states, may increase problem

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It has been more than three years since GST (Goods and Services Tax) came into force. One Nation, One Tax GST these days, the corona is under the grip of both the Center and the state. So far, 41 meetings have been held on GST and hundreds of amendments have been made in the GST law, but it remains a challenge to completely derail it. The possibility of a rar in the government and the opposition in the coming days about GST is clearly visible. It is worth noting that last month, on August 27, the 41st meeting of the GST Council was held, in which there was a discussion on the revision of new GST rates on several products, including the issue of GST compensation to the states. Although the 42nd meeting was to be held on 19 September, Which will now be on October 5. This has happened due to the monsoon session. Due to Kovid-19, GST collections have suffered a lot in the current financial year. It is evident that the problems of the already troubled center have increased further in the case of compensation to the states.

On July 1, 2017, the GST came with the promise that it would do the work to bridge the deficit of the states by 2022. These days the Center and states are on the backfoot in financial matters and the GST collection has gone down to a comparatively low level. In view of this, the central government has placed two options before the states, in which one can take loans equal to the RBI’s compensation on easy terms, while in the second option, states can take the full amount of GST dues i.e. Rs 2.35 lakh crore from the market. States that do not go to these options may have to wait until June 2022 to compensate.

Obviously, both these conditions are not less than a challenge before the states. The Central Government will never think that any such phase of God of Act will come, when it will not live up to its three year old promise. At present, 21 states have chosen the former option on the issue of GST compensation. All states will jointly take loans from RBI of about 97 thousand crores. Which includes non-BJP ruled states Andhra Pradesh and Odisha apart from BJP ruled states, but Jharkhand, Kerala, Maharashtra, Delhi, Punjab, Bengal, Telangana and Tamil Nadu and Rajasthan have not yet asked the Center what they will do.

It is obvious that a new type of financial crisis will not only arise in front of these states, but their development work will also be affected due to lack of money from the Center for a long time. Part-12 of the Indian Constitution discusses the financial relations of the center-state and there have been disputes between the two. If we understand the parameters of GST more deeply, the government had targeted to raise Rs 13 lakh crore in a year, which has never been completed in three years. This happened only once in the year 2017-18 when the GST collection crossed Rs 1 lakh crore. This happened four times in the financial year 2018-19 and five times more than one lakh crore rupees was collected in 2019-2020. Now the financial year 2020-21 is in the grip of Corona and the figures of GST collections have fallen on the ground. From this, it can be estimated how the situation has deteriorated in the case of indirect tax.

GST is one of his ambitious plans for Prime Minister Modi, but the growth rate these days is getting the best from agriculture and the country’s growth rate has fallen to a negative 23. The dilemma is how will problems be solved in the absence of money? It is possible that income tax may also fall in the coming days. The government is yet to see a specific agenda to increase tax collection. This may also be due to increased unemployment from the corona. Years ago, in the matter of increasing tax collection, the government used to find new avenues, but now in the event of not being able to compensate the states, it is suggesting the path of debt. Initially the government created four categories of GST payers, who were identified as indifferent, obstructive, enterprising and supportive.

Looking at the current situation, it seems that the tax payers are not indifferent, but have been caught in the corona blockage. The philosopher of England, Jeremy Bentham, gave the Strick and Caret theory, in which one means the strict way and the other calls for it. Given the way Corona has destroyed development, decimated income, destroyed businesses, increased unemployment, the government has neither been able to take very strict steps to increase tax collections nor has much appeal. Has been Can say that she is trying to overcome the problem, but it is difficult to tell when the Uberi will come and when the Corona will go, there is no idea. Right now the central and state governments are struggling with financial difficulties, but between these two the citizens of the country are also suffering.